Planet Fitness (PLNT) shares open lower this morning after CEO Chris Rondeau’s sudden departure last week continues to hang over the gym chain. Yahoo Finance’s Brad Smith and Seana Smith break down analysts’ latest calls on Planet Fitness over its unexpected leadership changeup.
BRAD SMITH: Shares of Planet Fitness have been on the move since late last week as Planet Fitness shares are still continuing to move lower by about 8/10 of a percent. Just last week, the veteran CEO Chris Rondeau abruptly announced that he was stepping down. Craig Benson, a six-year board member, was named interim CEO.
And this one, Seana, really took the street by storm here. And when you think about just the lifetime that Chris Rondeau has really kind of governed and steered this company the entirety of their existence as a publicly traded company and even time before that, now the larger question– and we saw share prices– or the share price reacting because now there’s a question mark.
There is that uncertainty about what new leadership will prioritize over top of Planet Fitness. Many of our viewers should remember that this is essentially one big marketing engine for a lot of their franchisees out there. And so particularly interesting to see what that new leadership strategy is like coming forward.
SEANA SMITH: Yeah, it’s gonna be so critical. And like you said, some of those question marks have been reflected in the analysts reaction that we’ve gotten over the last couple of days, Jefferies coming out reducing their rating here to hold, saying that there is a potential damage here just in terms of the relationship with the franchisees. The fact that this was such an abrupt departure, many did not see this coming. Raymond James lowered their price target by more than $20 a share to $66 a share. William Blair called the news abrupt, saying it did not appear planned.
So when you have an announcement like this, the fact that it is so significant, like you were talking about, the fact that the CEO was there for such a long time, and the fact that he had really steered the direction of this company, a new person at the helm right now is causing some anxiety out there amongst investors. We saw that play out in the initial drop that we saw last week shortly after this was announced. And then again, like we said, shares continuing to remain under pressure here, at least at the open off just about 1%.
BRAD SMITH: I’ll just say one thing here, Seana. Does this mean that we will finally get some new colors at Planet Fitness.
SEANA SMITH: I hope so. I’ve actually never been into Planet Fitness.
BRAD SMITH: Really? Look, I’m a Black Card member at Planet Fitness.
SEANA SMITH: Are you?
BRAD SMITH: Yes, I am. I pay $35 a month. And I go there once every six months. At the end of the day, I just need some other colors besides purple and gold in those gyms because, my goodness, it is an eyesore at certain points. I’m averse to the color yellow, so it is really tough for me to go–
SEANA SMITH: So if they make those changes, what do you think? Could we make it twice in six months, three times?
BRAD SMITH: I’ll be there three times a week if they make the color changes.
SEANA SMITH: Read it here first.
BRAD SMITH: Yes.
SEANA SMITH: We’ll see. That seems pretty simple, something they could do pretty easily.